Maryland	77-0404318
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

Common Stock, par value $.01 per share	New York Stock Exchange
(Title of each class)	(Name of each exchange on which registered)

 

			PAGE
PART I
ITEM 1.	BUSINESS		1
ITEM 1a.	RISK FACTORS		8
ITEM 1b.	UNRESOLVED STAFF COMMENTS		17
ITEM 2.	COMMUNITIES		17
ITEM 3.	LEGAL PROCEEDINGS		34
ITEM 4.	[RESERVED]		34
PART II
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
		STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	35
ITEM 6.	SELECTED FINANCIAL DATA		37
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
		CONDITION AND RESULTS OF OPERATIONS	40
ITEM 7a.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
		MARKET RISK	59
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		61
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
		ON ACCOUNTING AND FINANCIAL DISCLOSURE	61
ITEM 9a.	CONTROLS AND PROCEDURES		61
ITEM 9b.	OTHER INFORMATION		61
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		62
ITEM 11.	EXECUTIVE COMPENSATION		62
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
		AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	62
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR		63
		INDEPENDENCE
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES		63
PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULE		64
SIGNATURES			71

 

ITEM 1.

BUSINESS

●

173 operating apartment communities containing 51,693 apartment homes in ten states and the District of Columbia, of which 142 communities containing 43,052 apartment homes were consolidated for financial reporting purposes, four communities containing 1,194 apartment homes were held by joint ventures in which we hold an ownership and/or residual profits interest, and 27 communities containing 7,447 apartment homes were owned by the Funds (as defined below).  Nine of the consolidated communities containing 3,348 apartment homes were under redevelopment, as discussed below;

●	fourteen communities under construction that are expected to contain an aggregate of 3,334 apartment homes when completed; and

●	rights to develop an additional 26 communities that, if developed in the manner expected, will contain an estimated 7,313 apartment homes.

 

●	Boston, Massachusetts;

●	Chicago, Illinois;

●	Long Island, New York;

●	Los Angeles, California;

●	New York, New York;

●	Newport Beach, California;

●	San Francisco, California;

●	San Jose, California;

●	Seattle, Washington;

●	Shelton, Connecticut;

●	Virginia Beach, Virginia; and

●	Woodbridge, New Jersey.

●	strong focus on resident satisfaction;

●	staggering lease terms such that lease expirations are better matched to traffic patterns;

●	balancing high occupancy with premium pricing, and increasing rents as market conditions permit; and

●	managing community occupancy for optimal rental revenue levels.

●	we use purchase order controls, acquiring goods and services from pre-approved vendors;

●	we purchase supplies in bulk where possible;

●	we bid third-party contracts on a volume basis;

●	we strive to retain residents through high levels of service in order to eliminate the cost of preparing an apartment home for a new resident and to reduce marketing and vacant apartment utility costs;

●	we perform turnover work in-house or hire third parties, generally depending upon the least costly alternative;

●	we undertake preventive maintenance regularly to maximize resident satisfaction and property and equipment life; and

●	we aggressively pursue real estate tax appeals.

 

 

 

 

 

 

●	we may abandon opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover expenses already incurred in exploring those opportunities;

●	occupancy rates and rents at a community may fail to meet our original expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities;

●	we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third party permits and authorizations, which could result in increased costs or the delay or abandonment of opportunities;

●	we may incur costs that exceed our original estimates due to increased material, labor or other costs;

●	we may be unable to complete construction and lease-up of a community on schedule, resulting in increased construction and financing costs and a decrease in expected rental revenues;

●	we may be unable to obtain financing with favorable terms, or at all, for the proposed development of a community, which may cause us to delay or abandon an opportunity;

●

we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements); and

●

we may incur liability if our communities are not constructed and operated in compliance with the accessibility provisions of the Americans with Disabilities Acts, the Fair Housing Act or other federal, state or local requirements.  Noncompliance could result in imposition of fines, an award of damages to private litigants, and a requirement that we undertake structural modifications to remedy the noncompliance.

●	land and/or property acquisition costs;

●	fees paid to secure air rights and/or tax abatements;

●	construction or reconstruction costs;

●	costs of environmental remediation;

●	real estate taxes;

●	capitalized interest;

●	loan fees;

●

permits;

●	professional fees;

●	allocated development or redevelopment overhead; and

●	other regulatory fees.

 

●	plant closings, industry slowdowns and other factors that adversely affect the local economy;

●	an oversupply of, or a reduced demand for, apartment homes;

●	a decline in household formation or employment or lack of employment growth;

●	the inability or unwillingness of residents to pay rent increases;

●	rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs; and

●	economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.

 

 

 

●	an acquired property may fail to perform as we expected in analyzing our investment; and

●	our estimate of the costs of repositioning or redeveloping an acquired property may prove inaccurate.

●	investors in Fund II may fail to make their capital contributions when due and, as a result, Fund II may be unable to execute its investment objectives;

●	our subsidiaries that are the general partners of the Funds are generally liable, under partnership law, for the debts and obligations of the respective Funds, subject to certain exculpation and indemnification rights pursuant to the terms of the partnership agreement of the Funds;

●	investors in the Funds holding a majority of the partnership interests may remove us as the general partner without cause, subject to our right to receive an additional nine months of management fees after such removal and our right to acquire one of the properties then held by the Funds;

●

while we have broad discretion to manage the Funds and make investment decisions on behalf of the Funds, the investors or an advisory committee comprised of representatives of the investors must approve certain matters, and as a result we may be unable to cause the Funds to make certain investments or implement certain decisions that we consider beneficial;

●	we can develop communities but have been generally prohibited from making acquisitions of apartment communities outside of Fund II, which is our exclusive investment vehicle until August 2011 or when 90% of Fund II’s capital is invested, subject to certain exceptions; and

●	we may be liable and/or our status as a REIT may be jeopardized if either the Funds, or the REITs through which a number of investors have invested in the Funds and which we manage, fail to comply with various tax or other regulatory matters.

 

●	the environmental assessments described above have identified all potential environmental liabilities;

●	no prior owner created any material environmental condition not known to us or the consultants who prepared the assessments;

●	no environmental liabilities have developed since the environmental assessments were prepared;

●	the condition of land or operations in the vicinity of our communities, such as the presence of underground storage tanks, will not affect the environmental condition of our communities;

●	future uses or conditions, including, without limitation, changes in applicable environmental laws and regulations, will not result in the imposition of environmental liability; and

●	no environmental liabilities will arise at communities that we have sold for which we may have liability.

 

 

ITEM 1b.

UNRESOLVED STAFF COMMENTS

 

ITEM 2.

COMMUNITIES

Our real estate investments consist primarily of current operating apartment communities, communities in various stages of development (“Development Communities”) and Development Rights (as defined below).  Our current operating communities are further distinguished as Established Communities, Other Stabilized Communities, Lease-Up Communities and Redevelopment Communities.  The following is a description of each category:

●

Established Communities (also known as Same Store Communities) are consolidated communities where a comparison of operating results from the prior year to the current year is meaningful, as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year.  For the year ended December 31, 2010, the Established Communities are communities that are consolidated for financial reporting purposes, had stabilized occupancy and operating expenses as of January 1, 2009, are not conducting or planning to conduct substantial redevelopment activities and are not held for sale or planned for disposition within the current year.  A community is considered to have stabilized occupancy at the earlier of (i) attainment of 95% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.

●

Other Stabilized Communities includes all other completed communities that we own or have a direct or indirect ownership interest in, and that have stabilized occupancy, as defined above.  Other Stabilized Communities do not include communities that are conducting or planning to conduct substantial redevelopment activities within the current year.

●	Lease-Up Communities are communities where construction has been complete for less than one year and where physical occupancy has not reached 95%.

●

Redevelopment Communities are communities where substantial redevelopment is in progress or is planned to begin during the current year.  For communities that we wholly own, redevelopment is considered substantial when capital invested during the reconstruction effort is expected to exceed the lesser of $5,000,000 or 10% of the community’s acquisition cost and is expected to have a material impact on the community's operations, including occupancy levels and future retention rates.  The definition of substantial redevelopment may differ for communities owned through a joint venture arrangement, or by one of the Funds.